The Securities and Exchange Board of India (SEBI) is thinking of further tightening the norms related to Fixed Maturity Plans (FMPs). The Mutual Fund Advisory committee of SEBI discussed the matter on Friday, to amend norms of asset-liability. The board discussed the compulsory alignment of portfolio with scheme tenure, accountability of trustees and segregation of funds for corporate and retail investors. The regulator has the opinion that amendment in norms is necessary in the wake of the ongoing recessionary waves. However, investors can lose interest in case of further tightening of norms. Investors believe that tax advantage can make FMPs more profitable.

The chairman of the Association of Mutual Funds of India, AP Kurien said, "The New guidelines will bring discipline among fund managers to structure their products almost perfectly." He said that it’s the need of hour to address interest mismatch.

The head of Fixed Income of SBI MF, Parijat Agrawal said, "In a falling interest rate scene, the FMP rates are not attractive. Today the 90-day rate is at 7-7.25 per cent, which is not attractive. So there will be a slight slowdown in FMPs and people will move to open ended income funds."

SEBI also issued code of ethics for its own members. According to SEBI code, "Any person, who has reasonable ground to believe that a member has an interest in a particular matter, may bring the same with material evidence to the notice of the secretary to the board. The member should refrain from dealing with that case if the chairman or the board determines that there is a conflict of interest."